Assets flowing into exchange-traded funds via the retail and institutional channels saw a 17 percent increase last year, rising to $2.08 trillion, Broadridge Financial Solutions said in a report Monday.
The report coincided with the release of a PricewaterhouseCoopers forecast projecting ETF assets would double to at least $5 trillion by as soon as 2020.
“Institutional investors are widely expected to be the primary global growth driver with insurance companies, pension plans and hedge funds projected to be significant sources of demand for ETFs,” PwC said.
Also read: ETFs may not be as cheap as you think
The ETF sector has, in fact, exploded, adding about $380 billion over the past two years, according to ETF.com, which is hosting its InsideETFs conference in Florida this week.
In general, ETFs track indexes and are designed in much the same way as mutual funds, though they can be traded like stocks. Despite their growth, commission-free ETFs are included in only about a quarter of the largest defined benefit plans — they’re more popular in public defined benefit funds and endowments. That could be changing, though, particularly if the market overall continues to perform as it has.
In other highlights from its report, Broadridge, based in Lake Success, N.Y., said total third-party distribution of long-term mutual fund and ETF assets increased to $9.54 trillion in 2014.
Independent broker-dealers had the most long-term mutual funds and ETF assets under management in 2014, $2.33 trillion. The BDs were followed by RIAs, who had $1.74 trillion in ETF assets under management. Wirehouses had $1.68 trillion in ETF assets, while private banks had $1.49 trillion.
RIAs increased their ETF assets from 31 percent to 34 percent between 2013 and 2014. The data indicated that RIAs had 20 percent of total ETF assets under management.
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